ISYS6318 – E-business Concept

Week – 5
Ecommerce Marketplace Analysis
 LEARNING OUTCOMES
• Demonstrate the practical elements of e-business with selected
platforms and technologies, in a customized business model.
 OUTLINE
• Online market analysis.
• Location of transacting on the online market.
• E-commerce business model.
• The focus of the startup company.
Online market analysis
 Online Market
• The definition of an online marketplace is the exchange of information
and commercial transactions between consumers, businesses and
governments that are settled through various forms of online
presence such as search engines, social networks, comparison sites
and destination sites.
 Macro and Micro Environment

Source : Chaffey, Dave. (2013). Digital Business and e-Commerce Management: Strategy, Implementation and Practice
 Online Market Map

Source : Chaffey, Dave. (2013). Digital Business and e-Commerce Management: Strategy, Implementation and Practice
• The online market has a mapping like in the previous picture, some of
its components include:
• Customer segments
• Search intermediaries
• Intermediaries and media sites
• Destination sites
Location of transacting on the online market
 e-Market
• The electronic market is a virtual market such as the Internet where
no direct contact occurs between buyers and sellers (Rayport &
Sviokla, 1996).
• The different characteristics between traditional markets and
Internet-based electronic markets make businesses and customers
have to change the way they interact and transact.
• Starting from how to attract customers, increase brand awareness,
offer products, to buying and selling, everything is done differently,
especially with the increasingly intensive use of digital payments
today.
Source : Chaffey, Dave. (2013). Digital Business and e-Commerce Management: Strategy, Implementation and Practice
 Intermediation Type
• There are three possibilities related to this liaison position, including:
• Loss of liaison, because producers sell directly to consumers. This is called
disintermediation.
• After experiencing condition (a), the business model changed again so that a
liaison was needed again. This is like the emergence of a dropshipping
business model where every consumer can change their position to become a
liaison (distributor, reseller). This is called reintermediation.
• The emergence of new types of connectors, because of the opportunities that
could be exploited from the updated relationship structure, or the previous
type of connector is no longer relevant. This is known as countermediation.
 Multichannel Market
• When customers make online transactions they usually go through
customer journeys that first explore various marketing channels, for
example YouTube, Google Ads, advertisements on social media,
endorsements on Facebook, Instagram or Twitter.
• Customer journeys are an explanation of the behavior of modern
buyers who use a variety of different media (multichannel) both to
select suppliers, make purchases, and get customer support.
 Five Online Market Categories
No. Place of purchase online Description
1 Controlled by the seller Vendor site. https://www.bhinneka.com
2 Seller oriented Intermediaries controlled by third parties who are sellers, such as
distributors or agents. https://www.opodo.com/

3 Neutral Intermediaries not controlled by industrial buyers.

https://alibaba.com
Search engine specific. https://cnet.com
Comparison sites. https://moneysupermarket.com
Auction site. https://ebay.com

4 Buyer oriented An intermediary controlled by the buyer. https://covisint.com

Purchasing agents and aggregators.
5 Controlled by the buyer A procurement site that is integrated with the company's website.
https://eproc.pertamina.com/
 Customer Journey

Source : Chaffey, Dave. (2013). Digital Business and e-Commerce Management: Strategy, Implementation and Practice
 Commercial Transaction Mechanism
• Negotiable transactions
• Brokered transactions
• Auction
• Fixed price sales
• Pure market
• Barter
 Importance of Search Engines
• Search engines or search engines have an important role today in
identifying the direction of customer needs trends.
• The average modern customer uses a search engine to search for
information before making a purchase.
• From the keywords entered by these searchers, it can be seen what
products or services are needed by customers, and can be further
sorted based on their demographics.
E-commerce business model
 Business Model Canvas
• The design of an e-commerce business model is carried out using the
business model canvas (BMC). Here are the elements of BMC that
need to be understood:
• Value proposition. This is the essence of what a business offers its
customers.
• Customer segments. The different groups of customers to whom the
value proposition is delivered. In the recommended alternative BMC is
mass market, niche market, and segmented.
 Business Model Canvas
• Customer relationship (customer relationship). The types of
relationships between businesses and their customers include self-
service, auto service, community or mentoring.
• Channels. The method of delivering business services to its
customers.
• Main partners (key partners). Partners who can assist in exploiting
the value network and expanding business reach.
• Main activities (key activities). Activities that need to be done to
convey a value proposition to develop income.
 Business Model Canvas
• Key resources. The process and human resources for completing
activities in creating and delivering value propositions.
• Cost structure. Different cost elements. This element must be
ascertained in relation to activities and resources. Costs are classically
broken down into fixed and variable costs and economies of scale.
• Revenue streams. This is the method by which a business earns
income.
Three Perspectives of Online
Business Categories
The focus of the startup company
 Startups
• New companies or startups have become a trend since the
emergence of online businesses.
• The large number of startups seems to lead to market euphoria,
where eventually the stock price or valuation of existing startups far
exceeds the value of the assets and the business itself.
• It finally exploded in the phenomenon known as the dot.com crash in
the late 1990s.
 Scaling Startup
• Desmet et al (2000) suggest these points to measure the reliability of
a startup business:
• Customer acquisition costs through marketing.
• Contribution margin per customer (before acquisition costs).
• Average annual income per year from subscribers and other income such as
banner advertising and affiliate income. This is often measured as ARPU or
average revenue per user.
• Total number of subscribers.
• Proportion of customers who no longer use the product within a certain
period (churn rate).
 Scaling Startup
• According to Bain and Company, in collaboration with Management Today
magazine which researches startups in the UK, there are six (6) important points
that need to be considered when conducting an assessment of a startup.
1. Concept. The conceptual strengths of the business model include the potential
to build market segments and create potential income, strong value
proposition, advantages as a first mover in the market.
2. Innovation. The ability of a business to create something new, not only
imitating existing online business models or from traditional models.
3. Execution. The ability of a business to realize the business concepts it creates.
There are three important points in this execution, including: promotion,
performance and achievements.
 Scaling Startup
4. Transaction traffic (traffic). The number of online site visitors or app
users from the company, this shows the amount of brand awareness
from customers and has the potential to build transaction volume.
5. Financing. The ability of a business to attract investors
6. Profile. The profile of a business in the eyes of the public and the
market.
 REFERENCES
• Chaffey, Dave. (2013). Digital Business and e-Commerce Management:
Strategy, Implementation and Practice. 6. Pearson. United Kingdom. ISBN:
978-0-273-78654-2.
• Jelassi, Tawfik. Martinez-Lopez, Francisco J. (2020). Strategies for e-Business:
Concepts and Cases on Value Creation and Digital Business Transformation.
4. Springer. ISBN: 978-3-030-48949-6.
• Ebinum, M. (2019, October 17). How To: Business Model Canvas Explained.
Retrieved January 03, 2021, from https://medium.com/seed-digital/how-to-
business-model-canvas-explained-ad3676b6fe4a
• Wikipedia. (2020, December 29).
https://en.wikipedia.org/wiki/Business_Model_Canvas.